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Speculation mounts over fuel duty rise

Concerns are rising that the UK’s eight-year freeze on fuel duty could be scrapped to fund increased NHS spending following comments by the Chancellor yesterday.

Fuel pump

Mr Hammond’s comments have led to concerns of a fuel duty rise

Speaking to MPs, Philip Hammond said that the fuel duty freeze will have saved the average car driver £850 compared with the pre-2010 escalator by April 2019, and the average van driver over £2,100. But he said “it is important that we remember the other side of this coin” as he pointed out that the freezes have cost the Exchequer around £46bn in lost revenues through to 2018-19, and a further £38bn will be forgone over the Budget forecast period – twice as much as the funds spent on all NHS nurses and doctors each year.

Although Mr Hammond acknowledged a Treasury study in 2014 that said the benefits of the freeze to the economy almost offset all tax losses, he added that the analysis would “have to be looked at again in the context of the economy today”, leading to reports of a possible fuel duty rise to fund increased NHS spend.

RAC head of roads policy Nicholas Lyes responded, saying: “Motorists contribute around £46bn of motoring-related taxation to the Treasury each year so pay their fair share in tax. Pump prices are now at their highest level in four years, and given that drivers are spending around £8 more to fill up their tanks each time they are at a petrol station than they did a year ago, we’d argue that this is not the time to be considering a fuel duty rise.

“It is also important to note that the Treasury has been benefiting from the additional VAT drivers are having to pay as a result of higher fuel prices.”

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Natalie Middleton

Natalie has worked as a fleet journalist for nearly 20 years, previously as assistant editor on the former Company Car magazine before joining Fleet World in 2006.